June, 26, 2010

AGRICULTURAL Bank of China (AgBank) may raise 21,3bn in an initial public offering (IPO) that would test confidence in the country’s banking industry after record amounts of state -led lending.The bank is selling as much as HK88bn (11,4bn) of stock in the Hong Kong part of the sale, according to a filing to Japan’s finance ministry yesterday . Should it price shares on sale in Shanghai at the same level, the bank would raise a combined 17,6bn to 21,3bn. That would leave chairman Xiang Junbo relying on an over-allotment option to beat Industrial & Commercial Bank of China’s almost four-year-old record of 21,9bn.

Mr Xiang’s task is being complicated by this year’s 22% drop in China’s benchmark stock index and concerns that unprecedented bank lending last year will lead to a surge in delinquent loans.“It doesn’t seem to be the best environment to try to float a bank issuance, but they’re going ahead, so they may have to leave some money on the table,” said Madelynn Matlock, the Cincinnati-based manager of the Huntington International Equity Fund at Huntington Asset Advisors, which oversees 13bn .